Operations Improvement: The Peninsula of Possibilities vs. the Island of Perpetual Indecision

Jul 09, 2010

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Today’s organizations tend to fall into two camps:
the cautiously optimistic ones, which are focused on growth and profitability, and the ones that have been so shell-shocked by the Great Recession that they’ve become paralyzed by what-if questions. Are we in a “V,” “W,” or “U”-shaped recovery? Will this be a period of jobless growth? How do we operate when experts keep telling us that things will never be the same again?

While any leader should be cognizant of these macro issues, paralysis is not a position companies can afford. Regardless of whether we’re in the midst of “jobless growth” or a “V,” “W,” or “U”-shaped recovery, organizations that will stabilize and thrive are the ones taking action and positioning themselves to seize the opportunities the recession has created.

How? By reinvigorating customer relationships, rebuilding business processes, and aggressively monitoring and managing the health and viability of the supply chain.

Reinvigorate Customer Relationships

For many companies, one of the casualties of the past couple of years has been customer intimacy and loyalty. As survival and the need for cash became more critical, commercial issues and negotiations became the primary topics around which customer exchanges occurred. Not surprisingly, many vendor/customer relationships have weakened, as these exchanges don’t tend to produce deeper and more loyal relationships.

What’s even more disturbing is that many companies may not even be aware there’s a problem. Ask yourself the following questions regarding your key customers:

Do we know who our key customers are?

Is our position with our customers’ key decision-makers stronger or weaker than it was 12–18 months ago? Why?

What are our customers’ key wants and needs? Do we know for sure, or are we assuming? What are our competitive strengths and weaknesses relative to these key wants and needs?

What are the three most important “game changers” to our customers? Are we positioned to capitalize on these game changers? What are our competitors doing relative to these game changers?

Are we involved with our customers in their planning/strategic process?

What are our three greatest risks with our customers? Our greatest key differentiators?

How do we stack up against our competitors? Why would our customer choose us versus a competitor?

How vulnerable are our customers? Is their risk our risk? What can we do to mitigate their risk?

Your customers are the livelihood of your business. If those relationships are fractured in any way, now’s the time to repair and reinvigorate them. Chances are that your strongest competitors are working to displace you with your customers.

Rebuild Business Processes

When company viability was in question, leaders did what they needed to survive. This often meant losing key talent. In many instances, the talent that departed these companies was either critical to or defined the company’s business processes. As people left organizations, things simply were done differently, inadequately, or not at all. While this may have been key to survival, the rebuilding (or building for the first time) of strong business processes must occur for companies to stabilize and grow.

When building or rebuilding a business process, consider the following:

What’s the purpose of the process? What’s it intended to accomplish? How do we know how effective it is? What’s measured? What are the escalating improvement objectives?

What’s the scope of the process? Define the start and end of the process, as well as key influencing factors (people, data, and other processes) and stakeholders.

Does the process add value? Does it affect the customer or profitability?

Are we dependent on a key individual to effectively execute the process?

This is just a start. The bottom line is that regardless of the type of recovery your company will experience, it’s time to build or rebuild robust business processes to stabilize and position your company for growth.

Aggressively Monitor Your Supply Chain’s Health and Viability

For the reasons discussed earlier and many more, your supply chain (suppliers, internal operations, distributors, partners, third-party stakeholders) will also be challenged as they try to stabilize and grow. Remember that you’re ultimately responsible for ensuring every stakeholder involved in providing customers with differentiating and loyalty-building products and services is able to deliver.

Consider creating supply chain value stream maps that include all key stakeholders, and ask the following questions:

How economically viable and stable are the members of my supply chain? How well are they performing? Can they grow with us?

How customer centric is my supply chain? Are there opportunities to reduce non value-added activities and costs?

Do we include our supply chain partners in planning? Are they bringing innovation and driving improvements? How well do member organizations understand our wants, needs, and expectations?

Understanding, leveraging, and mitigating limitations and risk within your supply chain are essential elements of a winning organization’s profile and integral to continuing to build strong customer relationships.

Pick the Peninsula

Someone once said that the optimist lives on the peninsula of infinite possibilities, whereas the pessimist is stranded on the island of perpetual indecision. We advocate a mindset of cautious optimism.The last couple of years have been challenging for most of us, but we can’t overlook the fact that out of these challenges have come opportunities. It’s up to you whether or not to embrace them.